Federal Budget 2017: $8.4b for inland rail

A joint budget statement from Nationals leader and Agriculture Minister Barnaby Joyce and party deputy-leader and Regional Development Minister Fiona Nash said the $8.4b, for the government to fund the inland rail project, was “one of the biggest investments ever seen in regional Australia”.

It said the federal government would also establish a $472 million regional growth fund to deliver “critical infrastructure to ensure regional areas do not miss out on Australia’s growth story”.

“The Melbourne to Brisbane inland rail project will see this nationally significant freight transport project connect our regions to domestic and global markets by 2024,” the joint-statement said.

“Connected regional communities will be able to move goods to ports more efficiently and take advantage of the tremendous opportunities offered in Asia and beyond.

“The government will connect regional centres to our capital cities, with faster, more reliable rail services, with regional Australia getting its fair share of the new $10b national rail program.

“A further $500m will deliver upgrades to the regional rail network in Victoria.”

Pre-budget speculation suggested a figure of $1b may be budgeted to fund the nation building rail project that will run from Melbourne to Brisbane and links to WA for an estimated $10b cost.

The National Farmers’ Federation’s pre-budget submission called for a minimum $1b commitment from the Coalition government to move into the rail line’s construction phase which it says can help cut transportation costs for agricultural produce.

The ministerial budget statement did not provide any specific details of the funding mix between government grants and financing facilities that will be needed to try and attract private investment to aid the 1700 kilometre rail line’s construction.

It’s understood a mechanism for managing loan facilities is likely to be established through the government owned Australian Rail Track Corporation (ARTC) that manages about 4500kms of standard gauge interstate rail track.

The ARTC has already been allocated funding by the Coalition government to help determine where specific sections of the rail line will be built, with about 600 to 700kms of new track required.

Building new rail through the Darling Downs farming region in southern Queensland is seen as one of the project’s biggest costs and logistical challenges.

Another core challenge will be determining where other new segments of the inland rail will be constructed to avoid causing conflict with existing farmlands and communities – but while remaining efficient and attracting the volumes of bulk and containerised loads needed to make the network profitable, for attracting private sector investment.

The mix of agricultural produce and mining product and volumes to be transported will also be a critical aspects underpinning the inland rail’s potential business case and ongoing viability.

The budget statement from Mr Joyce and Senator Nash said the Turnbull-Joyce government was investing in regional Australia by delivering infrastructure and communications to drive economic growth and secure more and better paying jobs.

“Regional Australia is critical to driving the government’s plan to drive economic growth to secure more and better paying jobs which will encourage investment, facilitate innovation and provide vital infrastructure,” it said.

“The government is investing $75b in infrastructure funding and financing from 2017-18 to 2026-27 for critical airport, road, and rail infrastructure projects.

“The Roads to Recovery Program has been secured with $4.4b from 2013-14 to 2020-21 committed to the construction, repair and upgrade of local roads.

“The Coalition government will also continue to fund the Mobile Black Spot Program with $685m committed from 2013-14 to 2020-21 to deliver improvements such as safety barriers and street lighting to sections of dangerous road that have a crash history.

“The Coalition’s Mobile Black Spot Program continues to roll out with over 140 new base stations already live and almost 250 due to be live by June 30, 2017.

“The budget allocates $155.9m towards the program over the forward estimates, for a total program spend of $220m from 2015-16 to 2019-20.”

The statement said this year’s budget also delivered on the government’s election commitment to establish a $4b Regional Investment Corporation - a national body to streamline and speed up the approval of farm concessional loans like drought and dairy support, and administer the National Water Infrastructure Loan Facility.

“Affordable and reliable water supplies are key to growth in regional Australia,” the statement said.

“This government is already making the most significant investment in water infrastructure in Australian history to drive regional investment, agricultural production and jobs.

“The $500m National Water Infrastructure Development Fund and the $2b National Water Infrastructure Loan Facility are in place to incentivise state and territory governments to fast track priority projects that will support the growth of our agricultural industries and regional communities.”

The Regional Growth Fund will see $200m in additional funding to increase the government’s commitment to the Building Better Regions Fund to almost $500m and a $272m fund established to drive major transformational projects of more than $10m.

“Regional Australia is a key driver of the Australian economy, responsible for 67 per cent of our exports and 45 per cent of the domestic tourism market,” the statement said.

“In addition, most food production and all production of the gas and electricity that powers our households, occurs in regional Australia.

“Our cities rely on regional Australia to support their way of life.”

Last week, Transport Minister Darren Chester said Prime Minister Malcolm Turnbull had indicated he expected construction to start this year on the inland rail project.

Mr Chester said the Coalition government had already allocated $894m for some of the preliminary works and was “cognisant of the fact we’re at a critical stage in the project’s development”.

“Our aspiration remains the same and that is to finish the project as quickly as possible; I don’t want to set a strict timeline but at the moment it’s about 2024-2025,” he said.

Mr Chester said the inland rail was the biggest rail project in Australia for 100 years and it was “critical for helping our agricultural sector take full advantage of the free trade agreements that we’ve been able to negotiate in recent years”.

“What we want to see with the Melbourne to Brisbane inland rail is a modal shift of heavy vehicles onto rail, to meet Australia’s growing freight needs,” he said.

The Australian Logistics Council’s pre-budget submission called on the government to “Continue to invest in the development of the Melbourne to Brisbane inland rail project to drive productivity and efficiency in the supply chain”.

It said the inland rail was an investment in “strategic infrastructure for now and into the future, providing capacity to serve the east coast freight market for the next half century and beyond”.

“The corridor will deliver enduring benefits for decades to come by linking Victoria and regional New South Wales with Queensland, making it one of Australia's most important pieces of logistics infrastructure,” the ALC submission said.

“Inland rail won’t be constrained by the existing coastal route and will promote economic benefits through the efficient movement of both manufactured and fresh products between some of Australia's largest domestic markets.

“Funding for construction should also be committed to not only show that it will deliver this important project but to allow industry to plan for when operations commence – given the significant lead times required especially in the freight rail sector.”